It’s standard personal finance advice that you should never purchase a brand new vehicle. The instant you drive it off the lot, it will lose a huge percentage of it’s resale value, meaning that you are taking a huge financial network hit by purchasing a brand new vehicle. Not to mention that with a brand new vehicle you will never know the history of the car because it doesn’t have one yet – that particular model could have been manufactured with defects that are just waiting for you to experience. However, as you should with all advice, question it and consider if the advice is actually true. Should you never buy a brand new car? Well, here’s three reasons why you should buy a brand new car.
Depending on what type of vehicle you are looking to purchase, a brand new car may be a much better value. If you’re looking for the least expensive, then no, it won’t be the best option, but a brand new car may be the best value. One of the ways you’ll get better value is with the warranty. Buying a used car will give you a reduced or non-existent warranty for the vehicle. Having the warranty for a number of years (up to 10 for some) can give you a very long time in which to drive worry free about manufacturing defects. In addition, you may notice that the price difference between a brand new car and a relatively new one (2-4 years old) is actually not that great. This is most evident in the economy class of vehicle (<20k). When shopping for a vehicle, take all options into consideration. Sometimes paying an extra thousand or two may make sense if you don’t already have 50k of mileage on the vehicle, and a longer warranty to boot.
If you buy directly from a dealership (watch out for dirty car dealerships, however), you can often get great service from them. Some dealerships will do oil changes for free for a number of years, others will wash your car for you as long as you own it, and because you bought and are servicing your vehicle all at one location, they will know your car just as good as you do. You will not get any of this by purchasing a used vehicle. If you need it, you can get decent financing from a dealership as well. Obviously if you can afford to avoid financing, then please do, but you can often find a dealership willing to give you a loan at 0% for 3-5 years. So if you have the cash for the car, great, take the financing anyways, put the money aside and keep the interest while you pay off the car.
It used to be that a “base model” vehicle would be very bare bones. Now you can get a “base model” vehicle with air conditioning, a stereo system, power windows/locks, the whole works. As technology has improved, manufacturing costs have lowered, and now it is practically as expensive to get a car with roll up windows as it does one with power everything. Getting a newer vehicle increases the chances that you’ve purchased a better quality vehicle. One general rule of thumb that can help you avoid some potential headaches is to avoid purchasing the first year of a model that just came out. For example, if Honda makes a new model for 2013, it’d be better to wait for the 2014 version where they’ve had a chance to work out some of the kinks. There are exceptions, of course, where even the first year’s model is a good and reliable vehicle, but if you’re buying a new vehicle it is wise to avoid being that guinea pig.
As a general rule, no matter how I try, I find it hard to justify ever leasing a car. I like to make sure I see any argument from both sides, but leasing a car just never makes sense to me. How do you approach buying a vehicle? Which argument are you behind?